We talk a lot about how effective referral programs are in getting customers to send referrals. But how does that exactly work for B2B businesses?
Good question. After all, B2B (business-to-business) is an entirely different ball game from B2C (business-to-consumer).
In B2B, the buying cycles are longer, the purchases are larger, and the decision-making process is more complicated. You can’t afford to buy on impulse in B2B. The stakes are much too high.
This means that if you want your B2B solution to be considered by your prospects, you have to make the effort to build a relationship with them and earn their trust. Using a well-planned referral agreement can make things easier in trust-building, but there are many other tactics this article will cover as well.
And last I heard, referral marketing is built on trust. I you can formalize the referral marketing process in the form of a B2B referral program, it can have far-reaching benefits for your business.
This is why it’s important to understand how B2B referral programs work. But how do you build a successful one? How do you set it up in a way that best suits the needs of your B2B business?
We lay it all out for you in this definitive guide.
Ready? Dig in!
The Benefits of a B2B Referral Program
But first, let’s go over how a B2B referral program can benefit your business. In a nutshell, building one can lower your CAC, increase your conversion rate, reduce customer churn.
It’s too easy to get carried away in your marketing spend once leads and new customers start rolling in. If you don't tread lightly, your CAC (customer acquisition costs) will blindside you like a left hook you didn't see coming. And make no mistake, if you allow your CAC to exceed your CLV (customer lifetime value), your B2B business will fail.
That is unlikely to happen with a B2B referral program. After all, referral marketing spending is mostly tied to reward costs. And because reward costs are much easier to quantify and manage, you will have more control of how you spend your budget, hence the lower CAC.
Higher conversion rates
Studies show that B2B companies with referrals experience a 70% higher conversion rate.
No surprise there. After all, customers are more likely to trust the recommendations of "real people" over traditional advertising.
This is even more true with B2B transactions where purchases carry a higher price tag. When a customer recommends a B2B solution to a peer, she is literally putting her reputation on the line, giving the recommendation more weight.
[Image source: Leadpages ]
Higher retention rates
Referred customers are generally more loyal than customers acquired via other marketing channels. In fact, a Wharton study shows that referred customers are 18% less likely to churn than non-referred customers. Another study from Deloitte shows that customers acquired through referrals have a 37% higher retention rate.
So why do referred customers stay longer? Simple. Customers will only recommend a solution to businesses who they think will find it useful.
In other words, you won't recommend an enterprise accounting software to a startup with only 5 employees as much as you won't recommend TikTok to your grandmother.
That doesn't mean you can slack off in your retention efforts. But with such highly targeted leads in your pipeline, you'll have the momentum needed to prime your customers for your referral program.
How to build a B2B referral program
A B2B referral program is not something you can just "wing." If you want your B2B referral program to bring the ROI, it needs to have the right pieces and the moving parts to thrive and sustain itself over the long haul.
Let’s outline the steps to building a successful B2B referral program.
1. Make your brand referral-worthy
Are your products and services making your customers happy?
For your referral marketing efforts to hit the ground running, you need happy customers. Otherwise, why would they recommend your solution to others?
Dropbox, for example, grew 3,900% with a simple referral program, managing to double its user base every three months between 2008 and 2010. How did they pull it off? It’s not because of their referral program alone. They did it by proactively gathering feedback from users and continuously improving their product.
So before you think about launching a B2B referral program, find out first if your customers (or at least most of them) are delighted with your brand, products, and services.
There are many ways to find out if you're referral-worthy:
- Conduct a Net Promoter Score (NPS) survey. An NPS survey is a quick and easy way to check if your customers are willing to recommend your solution to others. You can use survey platforms like Qualtrics and SurveyMonkey to conduct one.
- Assess your retention rates. Are your customers willing to continue spending money to keep using your products and services? That's all the validation you need.
- Use social listening. What do your customers say about you on social media? Social listening tools like Hootsuite and BrandMentions can help you monitor and analyze conversations around your brand. If they’re saying good things about you on social media, then chances are they won’t mind vouching for you through referrals.
2. Develop and nurture customer relationships
It's already cliché at this point but it bears repeating: Relationships are the foundation of every successful business.
In B2B, relationships are not just your foundation, they are your lifeblood.
[Image source: Content Snare ]
As already mentioned in this blog post’s introduction, the getting-to-know stage in the B2B buyer's journey is typically long and fraught with uncertainty. If you want to keep your prospects and customers interested, make the effort to develop and nurture your relationship with them.
So don't be a stranger. Get to know them. Understand their needs. Remember, B2B relationships are a marathon, not a sprint. So make sure to engage and support them at all stages of that relationship.
Do they need more help learning how to use your product or service? Give them an in-app walkthrough or send them an email that helps them every step of the way. Or provide them essential resources that will help them get more value out of your solution. Be of service in any way you can.
Besides, continually engaging your customers provides you with many opportunities to mention or promote your B2B referral program. When you're making a proactive effort to give customers a great brand experience, asking for referrals doesn't feel awkward and pushy, but feels like a natural part of the conversation, which increases the chances of them sending those referrals the moment you ask them to.
3. Decide which customers to target
By this point, you're pretty sure that most of your customers are happy with your brand. It's now time to decide which of your customers to ask for referrals. And you need to target the best ones to get your B2B referral program some much-needed traction.
You need to pick the best customers because they're in a great position to recommend your brand to others. When it comes to knowing whether you can deliver the goods, they are the best authority on the subject.
The term "best customers" can mean a lot of things, so let's break it down into different categories.
- Most loyal customers. These are repeat purchasers or subscribers with the longest tenure. If customers are willing to spend money on your solution for a long time, then likely won’t mind extending their support to your referral program.
- Highest paying customers. Customers will spend a lot of money on products and services they're enthusiastic about. That level of enthusiasm may translate to the act of sending referrals.
- Brand advocates. These are customers who have already recommended your solution to others. If you've already done an NPS survey, reach out to customers who have given you a score of 9 or 10. You can also connect with customers who have given you positive reviews online.
You need a systematic and formalized approach to identify your best customers. For the best results, make sure that you gather both quantitative and qualitative data on customers via:
- Your customer experience or customer success teams (if you have them).
- Social media tools
4. Decide when to ask for referrals
Timing matters in referral marketing. If you ask too early, customers will think you’re pushy and desperate. Ask too late and the customer might not be in the best mood to send referrals.
The general rule of thumb is to ask for referrals when they are most satisfied and happiest with your brand. Take note, however, that the best times to ask depend on the nature of your product or service.
To give you an idea, here are a few scenarios where referral invites would be most welcome:
- After a customer has experienced a milestone with your product or service (e.g., later)
- After one year of using your product or service
- As soon as a customer has responded positively to a survey
- After a customer testimonial
- Following a successful customer service experience
5. Hand-off referred leads to sales
It helps to have a deep understanding of the prospect, but if your marketing and sales teams can’t see eye to eye on how to nurture leads, many of your valuable referred leads will fall through the cracks.
Keep in mind that referred leads are warm leads. They already know who you are and how you can help them. As such, you want to respond to them appropriately and be able to guide them in their next steps.The worst thing you can do is allow your marketing and sales teams to give them mixed signals and contradictory messages.
[Image source: ResourcefulSelling.com ]
If you want to close referred leads, the handoff needs to be as smooth as possible. For your sales team to have a better chance to close referred leads, the "ask" needs to be communicated in ways that are meaningful and relevant to each prospect.
You can prevent common handoff issues by defining a criteria on how to qualify referred leads and convert them into paying customers. Using a system (such as a CRM) that is shared by marketing and sales helps, but to achieve true alignment, a service-level agreement (SLA) must be developed to establish expectations and get them working together towards the same goal.
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6. Reward customers when they refer their friends
Time to motivate your customers to send those referrals. What are you going to give them in return for their efforts?
It goes without saying. If you want customers to send referrals your way, offer them rewards they will care about.
Don't just offer them desirable rewards. You need to incentivize them in ways that align with and reinforce the core values of your brand.
Keep in mind that B2C and B2B customers are motivated by different rewards. So you might want to think twice before you start offering cash rewards or an iPad as an incentive.
Cash rewards will only work for small businesses, but not for large businesses where purchases happen by consensus or committee. When you offer them cash, where will all that money go? Do they split the cash?
You can spare them the awkwardness by offering non-cash rewards instead.
Besides, non-cash rewards offer more variety, more convenience, and are easier to track.
Besides, the University of Chicago states that offering non-cash rewards increase a referral program’s success by 24% over the use of cash incentives.
Non-cash rewards you can offer B2B customers include:
- Upgrades. If you're a SaaS company, it's a good idea to offer rewards that align with the benefits of your products. Zoho Mail, an email hosting service, for example, rewards successful referrals by providing the referring customer up to 20 free users in their hosted email plan.
- Educational rewards. As a solutions provider, it makes sense to offer webinars, free training, workshops, or courses in exchange for referrals.
- Discounts. Discounts as rewards are a good way to incentivize businesses. Decision-makers, after all, will always welcome an opportunity to free up the company’s budget.
[Image source: Hubstaff ]
7. Decide on a reward structure
How (and when) you distribute your rewards are just as important as the rewards themselves.
Here are different reward structures you can use in your B2B referral program.
- Dual-sided rewards. If you have the budget for it, consider offering rewards to both the referring customer and the referred friend. Naturally, rewarding both parties increases the likelihood of referrals converting into clients.
- Milestone rewards. Consider offering a variety of rewards, where a different reward is offered for each succeeding milestone. Having different rewards can make your referral program more engaging, and the knowledge that there's always a bigger reward up for grabs can motivate customers to keep sending referrals.
- Leaderboard rewards. A leaderboard showing an updated list of top referrers provides customers the added motivation to keep sending referrals. This is a good way to tap into people's innate desire for status.
Pro-tip: Consider offering micro rewards along with bigger rewards. B2B sales cycles can take weeks or months—even years—before decision-makers and stakeholders are convinced to close a deal. Make them wait too long for each reward and they might lose interest in the referral program and as a result never send referrals again. Offering smaller, snackable rewards for each turning point that leads to the next milestone (e.g., a prospect agreeing to a product demo, a discovery call, etc) is a good way to keep referring customers interested and engaged.
Pro-tip #2: Gamify your B2B referral program to keep customers engaged in the referral process. By incorporating classic game elements like points, badges, leaderboards, you can tap into your customers' competitive nature and motivate them to keep playing (so to speak).
Evernote’s referral program is a good example of how gamification works.
[Image source: Evernote ]
8. Make your B2B referral program easy to share
Give customers a great experience and they will be happy to return the favor. Who knows? Maybe that favor may come in the form of referrals.
Customers, however, are lazy. If you make the referral process complicated, they're not going to do the hard work for you.
If you want your customers to give your referral program the time of day, you have to make the referral process easy and seamless for them.
Here are effective ways to do just that.
- Keep referral emails short and simple. We're in the era of 8-second attention spans. Don't bore your customers with long email messages. Go straight to the point!
- Provide them with a unique referral link. A referral link allows customers to share your referral program using their preferred platform. Also, giving customers a referral link they can call their own gives them ownership over the referral experience.
- Include a pre-written referral invite message. Some customers don't want to bother writing a referral invitation message themselves. Save them the pain by including a pre-written referral invite message they can customize to their liking.
- Add email and social sharing buttons. Social sharing buttons increase sharing by 700%, after all.
- Use auto-fill forms. Filling out forms can be a hassle. Spare your customers the agony by using auto-fill forms.
- Provide clear, concise steps on how to participate in the referral program. Tell customers what they need to do so they'll do it! You can add visuals to grab attention and make the copy more engaging.
Speaking of steps, Vianet knows how it’s done.
[Image source: Vianet ]
9. Promote your referral program
The most common reason why some B2B referral programs fail? Lack of promotion.
Referral marketing isn't a case of "if you build it, they will come." If you want referrals to keep coming, tell your customers that your referral program exists.
But you don't just shout it into the void. You need to meet where your customers are if you want to reach them.
Not an easy task, exactly. In the current digital landscape where new innovation and trends crop up all the time, your customers could be anywhere.
To stay in front of your customers, you need to promote your B2B referral program via the right channels and "touchpoints."
You need to map your brand's customer journey to pull that off. Once you do, you'll find it easier to understand the motivations and emotions that drive your customers' actions. The insights you gain from the process will then help inform your promotional strategy, especially the 'where' and the 'how' of it.
Let’s start with the ‘where.’ You can connect with your customers through the following digital mediums—email, social media, your website, or within your app (if you have one).
When used correctly, email marketing can't be beaten when it comes to personalization and targeting capabilities. After all, when a customer subscribes to your email newsletter, he or she is literally giving you permission to send them marketing and promotional material, including those that mention your B2B referral program.
It gets even better when you use email segmentation to your advantage. By breaking up your email subscribers into smaller lists based on a variety of criteria, you can send customers and prospects highly targeted and tailor-made referral emails, keeping your referral pipeline filled to the brim.
There are three types of referral emails you can send subscribers to promote your B2B referral program, namely 1) the post-purchase referral email, 2) the follow-up referral email, and 3) the advocacy email.
- Post-purchase referral emails. This is the part where you introduce your B2B referral program to new subscribers and tell them what they have to gain when they refer a friend. Don't forget to provide a step-by-step guide on how to participate in the referral program. Make sure it’s crystal-clear!
- Follow-up referral emails. Customers will rarely sign up for your B2B referral program the first time you mention it. They might not be ready, or they are simply not interested… yet. Good thing you can always send them a follow-up email. Just don't send a follow-up email too soon. And make sure you space them out (again, customers don't like aggressive tactics').
- Advocacy referral emails. Customers in the advocacy stage are your most loyal fans. Chances are, many of them are already recommending your products to others. Sending advocacy referral emails will not only help keep it that way, but also provide more motivation to keep sending more referrals. An advocacy email could be in the form of a thank you note (for sending referrals) or a heads up that informs a customer that she's about to reach a referral milestone.
Pro-tip: Include a referral invite in your email signature. It's a subtle way to make your referral program top of mind.
Here’s an example of a post-purchase referral email courtesy of Bench Accounting. Notice the referral invite below the email’s main CTA?
[Image source: Bench Accounting ]
Social media is where people like to tell their peers about their favorite products and brands. If you want to expand the reach of your referral program, promote it on Facebook, Twitter, LinkedIn, or any social platform where your target customers like to hang out. And make sure that you use social media's targeting capabilities to connect and engage with as many qualified prospects as possible.
A few tips on how to spread the word about your B2B referral program on the social interwebs:
- Add social share buttons. Already mentioned earlier but it bears repeating.
- Give kudos and say thank you to referring customers via a shout-out. Doing so will make them feel appreciated for their efforts. Not only will it encourage them to keep sending referrals, but the added engagement can boost the visibility of your referral programs in that particular social platform.
- Mention or promote your referral program in your social bios, pinned tweets, or posts.
You want to mention your B2B referral program on relevant, high-traffic pages on your website. These include your home page, the about page, blog posts, check out, or landing pages.
You also want to keep creating relevant and interesting content to give customers a good reason to keep visiting your website. Remember, every visit is an opportunity to get eyeballs on your website, and subsequently your referral program.
Within your app or solution
If you’re a SaaS company, you can get your B2B referral program in front of your customers or users by promoting it within your app or solution.
A few tips:
- Introduce your referral program during onboarding. The onboarding stage is where new customers are most engaged in your solution. It’s a good time as any to introduce them to your B2B referral program.
- Set up a referral portal. Create a dedicated portal or section for your B2B referral program they can keep getting back to. It's a good way to make your referral program top of mind. Make sure it has all the essentials such as the value proposition, the rewards, instructions on how to participate, and CTA's.
- Put CTAs in the right places. Make your CTA's prominent by using large font and contrasting colors and put them in areas where referral invites make sense in the customer journey. For example, when a customer visits your app's Premium upgrade section, you can incentivize the upgrade by offering a free upgrade or a discount in exchange for referrals.
- Create in-app prompts. As already mentioned, referral invites are most effective during touchpoints where customers are happiest and most engaged. You can send referral prompts to customers every time they reach a significant milestone as a user.
10. Craft your referral messages
Just like any marketing initiative, referral marketing needs the right messaging to get your audience to do what you want them to do. Want them to keep feeding your sales pipeline with referrals? Make sure your marketing and referral messages are resonating with your prospects and customers.
In every referral message you put out, be it a landing page, a blog post, or a referral email, make sure you communicate the 'why' behind your brand and your B2B referral program. Not only will it remind your customers why they love your brand, but it will also persuade them to share that brand experience with others.
Some quick tips on getting your referral messaging right:
- Keep it short and simple. So that customers (and prospects) can easily understand what you want them to do.
- Highlight the benefits of your referral program. What's in it for them? Why should they give you a referral? Tell them! But make sure to look at it from the customers' point of view.
- Keep it personalized. People don't want to be treated like a 'metric' or a ' number'; They want to be treated as individuals, with their own desires, fears, and needs. It goes beyond calling them by their first name. You need to provide them with relevant and timely information, so much so that it makes them feel that your message is made specifically for them.
11. Track and measure your B2B referral program
Having a B2B referral program is great. But at some point, you need to make sure that your efforts are helping your business earn money. Just because referrals are coming in doesn't mean you're getting a positive return on your investment.
So how would you know if your B2B referral program is helping your business earn money?
You can track your B2B referral program for starters. By tracking and measuring your core KPI's, you can determine whether or not you're hitting your goals and then make necessary changes that will give your referral marketing campaign a boost.
To find out how well your B2B referral program is faring, you'd do well to track the following key metrics:
- Participation rate. This is the number of customers who are participating in your B2B referral program. You need to keep track of your referral program's participation rate because it gives you a baseline with which to assess its potential as a customer acquisition channel. It offers a top-funnel view of your referral program, which can inform your overall referral marketing strategy.
- Referral/share rate. The referral/share rate is the percentage of participating customers who send referrals your way. The referral rate can tell a great deal about how effective your marketing initiatives are. Do you need to offer better incentives? Are you promoting your referral program in the right channels? Are your referral messages resonating enough?
- Impressions. Impressions are the number of times your referral program is put in front of your viewers. Tracking this metric is important because it helps you determine if your B2B referral program is visible enough to make a difference. While impressions alone won't tell how effective your referral marketing campaign is, it gives you a frame of reference with which to measure the finer details of your messaging and brand experience.
- Conversion/response rate. The conversion or response rate is the number of times a referral prospect has taken any action on your referral program. The conversion rate can be tricky to measure because it's hard to account for each action taken by a customer (especially in B2B where sales cycles are long). An action can be a trial sign-up, an email capture, a demo sign-up--anything that counts as something where an interested customer has acted on the referral program. To get reliable results, make sure that you define a consistent baseline for measuring conversions.
As you continue to track and measure these core KPI’s, remember to keep an eye on whether your referrals are fueling continuous growth. Having a positive ROI now doesn't mean you're going to generate a decent profit tomorrow.
A good way to determine future success is to calculate your B2B referral program's viral loop. For more information on viral loops, check our blog post: What is a Viral Loop and How Does It Work?
12. Automate your referral program
Running a referral program can be relatively easy… at least at first. As referrals keep coming and your B2B referral program continues to grow, it does get harder to keep track of everything.
If things start to become overwhelming, the best course of action is to automate your B2B referral program using dedicated referral software. You want something that simplifies everything, from setup through rewards.
A referral software can do most of the heavy lifting, saving you a huge amount of time and resources, and allowing you to focus on tasks that can truly move the needle for your business.
A referral software can help automate the following tasks:
- Generation of unique referral links
- Personalization and integration of referral campaign into your site
- Tracking of new participants and referrals
- Sending emails tailored to the needs of your referral program (e.g., adds referral links, notifies winners, etc.)
- Rewards management and fulfillment
There's no shortage of choices out there when it comes to referral marketing software. To maximize your investment, choose one that is tailored to your B2B company's goals and needs.
GrowSurf, for example, is a referral marketing software tailored to the needs of tech startups and media publishers. As an end-to-end referral marketing platform, GrowSurf has helped B2B businesses generate 300-1,000% returns and 9-40% monthly growth from their referral program.
If you want your referral program to achieve that kind of growth, you can start by signing up for GrowSurf’s no-risk 14-day free trial.
Over to you
We hope this definitive guide will help you launch a successful B2B referral program without a hitch. There’s no question that referral marketing is the best way to grow your business. If there’s one last piece of advice I can tell you, it is this: focus on the needs of your customers. If you accomplish that, you’re making it easy for them to bring up what you do. And you need to make sure you’re always striving to be worthy of their recommendation.
Need help building a B2B referral program that guarantees faster and low-cost growth? GrowSurf can help you. Sign up for a free 14-day trial now
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Set up your referral marketing program with software that lowers your customer acquisition cost and saves you gobs of time.